Art Phakes Discovered!

March 2004
The Licensing Book

The first time I saw him was at Licensing Show.  He was cruising the Art Licensing section at Javits Center, stopping at certain booths and appearing to stare at one piece of artwork and then at another.  He would face each squarely for several seconds, turn to the next for a short time and so on until moving to the next booth of interest.  He did all of this quite casually.

Being nondescript in appearance, dressed in a seedy brown business suit and carrying an overused leather briefcase, the individual blended with the foot traffic in the aisles of the Show.  Had I not been given his photograph and been asked to watch for him, I certainly would not have noticed him. 

Several booths behind, I saw my friend, Larry Lexus the Licensing Lawyer, progressing at a similar pace and seeming to be unaware of anything other than the artwork on display.  It had been Larry who provided the photograph and requested that I observe the man. 

As previously arranged, Larry caught my eye and nodded toward a diverging aisleway.  I waited several seconds and then walked down the designated aisleway.  Larry followed, and we met inside the high walls of the Warner Brothers display where we found a small table with two empty chairs. 

"Well, Larry, I saw the fellow.  He seemed to be just a member of the crowd.  What exactly is your interest in him?"

"My friend, his name is Arthur Phakes, who together with his henchmen, is responsible for a large portion of the seemingly limitless flow of counterfeit merchandise that bombards the American marketplace.  Despite his unobtrusive manner, he is both a dangerous and an extremely wealthy individual. 

"I first became aware of Mr. Phakes quite by accident.  As you know, certain of my clients are marketers of a variety of products which incorporate original and decorative licensed artwork.  These clients could not help but notice that their product lines were being simulated with increasing frequency and alarming rapidity. 

In researching the situation, I interviewed several artists' agents with whom my clients had done substantial licensing business.  During one of the interviews at last year's Licensing Show, the agent with whom I was speaking made humorous reference to an individual whom the agent said resembled more a slightly unsuccessful stock broker than an art licensee.  Following the agent's gaze, I was struck by the methodical manner in which the individual proceeded through the displays. 

Without boring you with details, further investigation disclosed the identity of the individual and his modus operandi.  He speaks with no one, blends with the crowd and seems not to have a pattern to his movements.  Yet, over the period of the entire Show, he manages to inspect and photograph all significant new artwork on display.  His compatriots transmit the photographs to associates in the Orient who promptly create identical copies or slight variations which are stored for future use. 

As new legitimate licensed merchandise is prepared for production by major licensees in Orient factories, Phakes and his associates promptly initiate production of knockoff products incorporating the previously copied artwork.  This all happens in such rapid fashion that the legitimate and knock-off products reach the marketplace almost simultaneously.

"Art Phakes is a busy fellow and has other arrangements for creating counterfeit merchandise.  However, I wanted you to become familiar with him and see him at work, because I wish to enlist your assistance in preparing to launch litigation against Mr. Phakes in the near future."

"I'll be happy to help in any way that I can, Larry, but I'm certain you have the matter well in hand.  Presumably your clients have taken the necessary precautions."

"Certainly, my friend. My clients and their licensors have commenced a rigorous process by which copyrights in new artwork are registered with the United States Copyright Office prior to initial publication.  In that way, we are in position to launch litigation immediately upon the appearance of infringing products because, as you know, the law requires that copyrights be registered in advance of litigation.  By taking this step prior to publication, the copyright proprietors also place themselves in a position to shift the costs of attorneys' fees in policing litigation to the guilty parties.  Further, they gain access to 'statutory damages' of up to $150,000.00 per infringement.

"In view of the systematic and intentional infringement perpetrated by Art Phakes and his cohorts, I anticipate that we will have an opportunity to obtain a substantial financial remedy for my clients.  Nevertheless, I seek your assistance in ensuring that I have not omitted any essential steps."

"Larry, we have recently discussed the additional remedy offered by the United States Custom Service of seizing and impounding shipments of 'piratical copies' of copyrighted works.  I assume you have taken the steps necessary to notify U.S. Customs and record the appropriate registrations."

"Yes, we have done so.  Certain of the shipments will, indeed, be brought to the attention of U.S. Customs for purposes of seizure.  However, other shipments will be permitted to pass through in order that we might gain access to the Courts and, hopefully, create such financial hardship for Art Phakes that he will be reluctant to incur the wrath of my clients a second time.

"Furthermore, my colleagues are working with representatives of the U.S. Department of Justice in preparing to launch concurrent criminal prosecution of Mr. Phakes.  As you know, the Copyright Act provides severe criminal penalties for copyright violations in egregious cases.  We believe that the systematic nature of these infringements, the scope and extent of the damage caused by Art Phakes to my Clients warrant a most aggressive response. 

"We fully intend to send a message not only to Art Phakes but to all others who would fake art and infringe on our copyrights."

The next time I saw Art Phakes was in federal court. He was surrounded by a battery of lawyers, but looked quite placid.  He would become a relentless adversary.

Practices

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